Thursday, October 25, 2007

If Only Modern Economists Would Read and Understand His Thinking

On International Law Reporter (here) Jacob Katz Cogan writes: “Petersmann: Constitutionalism and the Regulation of International Markets”, which contains this paragraph:

“Since Adam Smith, economists increasingly acknowledge these interdependencies between economic, legal and social order, for example between the economic objective of promoting consumer welfare through legal guarantees of consumer-driven competition and open markets, and the democratic objective of protecting individual self-government and peaceful cooperation among citizens through constitutional guarantees of equal freedoms and social justice.”

CommentIf only; If only!

The majority of modern economists do not consider context beyond Homo economicus, a species of rational, self-interested maximisers, who act without any human characteristics at all and who obey automatically the dictates of sets of mathematical equations.

Adam Smith was just before the beginning of the classical economics (not being ‘ its not likely to be much to do with the evolution of the commercial economy or with much beyond their rational decision models of ‘human action’.

However, if they were somehow to acknowledge a real world of ‘interdependencies’ they would understand much more about how economies and those in them function. We can take it that the above paragraph is a description of what economics should be about, but presently is not.

Adam Smith’s Works show how economics might have developed if only it had continued to apply the lessons of the past to the problems of the present and not chase the futile goal of predicting the future.